week 2 Flashcards
what does bitcoin network require to add new blocks to the blockchain
proof-of-work
how are new blocks added to the blockchain
users in the network vote on new blocks and come to a consensus on whether or not to include new blocks to the chain
how does proof-of-work interact with voting
proof-of-work ties voting with computational power rather than digital identity
how does proof-of-work tying voting to computational power help?
it is meant to prevent the Sybil attack in which a user can make many IDs to skew the vote
is the ideal of 1 CPU I vote reflected in reality
No. there is uneven distribution of computational power so uneven distribution of votes
does bitcoin rely on any assumptions
yes, that there is an honest majority of computational power; if there is an honest majority, then it will be able to mine faster than a malicious minority and have a higher probability of creating the next block; once the network comes to a consensus on a new block, it’s generally in a miner’s best interest to mine on the longest observed blockchain, which is seen as the “true” valid transaction history because it had the most work put into it
what is a weakness of bitcoin
if a malicious actor controls more than 50% o the mining power, it can mine an alternative chain with a different transaction history and make that the longest chain. other users would then accept that chain as the “true” transaction history
what can a malicious actor do with 51% of the mining power
double spend
what is the Goldfinger Attack
using 51% mining power to destroy the value of the cryptocurrency
what is forkin
when there are multiple chains forking off of a chain or transaction history; can be intentional or unintentional
what is the significance of a fork
it means there are alternative narratives/transactions competing to become “the” block. miners eventually resolve forks and agree on one of the chains to be valid and build on that block rather than the other one
what are the causes of forks
1) natural causes
2) double-spend attempts
3) purposeful forks to make changes to the bitcoin protocol
- hard fork: allow for previously invalid transactions to become valid
- soft fork: implement protocol updates that strictly reduce the set of valid transactions
where is the value in bitcoin
- it’s not backed by dollars or gold
- it’s just based on people’s belief that the numbers are worth something and a system that prevents unfair changes
what is scalability
the ability of a technology or business to be used by increasing numbers of people
what issue does scalability of bitcoin raise?
how to scale or improve in the face of decentralized governance: bitcoin does not have a governance mechanism in its protocol; instead, users introduce proposals called BIPs on forums and the community votes on them ad hoc
